Question

8.) You are evaluating an investment that will provide the cash flows listed below at the end of each year. You believe that you should earn 11.50% percent compounded                                                                                                                                                                                          

annually on this investment. How much would you be willing to pay for this investment?                                                                                                                                                                                    

                                                                                                                                                                                                  

                              Year       1             2             3             4             5                                                                                       

                              CFs         200,000               225,000               275,000               325,000               3,500,000                                                                                      

                                                                                                                                                                                                  

                              I                                                                                                                                                                   

                              PV         

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.